QUESTION 2 TOTAL 17 MARKS The Asset section of the Balance Sheet of Aubergine Ltd at the 30th June 20X2 is presented below: Current Assets $ Cash at Bank $ 15,354 79,840 Inventory Accounts Receivable 42,387 (3,981) Less Allowance for Doubtful Debts 38,406 133,600 Non-Current Assets Plant & Equipment Less Accumulated depreciation Intangibles 1,950,000 (390,000) 1,560,000 250,000 1,810,000 TOTAL ASSETS 1,943,600 Note that where journal entries are needed narrations are not required. # Round any calculations to the nearest dollar. a) During the year ending 30th June 20x3, Aubergine Ltd identified the following debts as uncollectible on the dates mentioned: Date Debtore Bad debt $21 11/10/X2 D. Martyn 1,2542 18/2/X32 N. Fyfe 1,767 Required Prepare journal entry/ies to write off these bad debts on the dates mentioned. 3 marks DR CR- 12544 HP 12544 Date [11/10/X2 Allowance for Doubtful Debts E [ Accounts Receivable - D. Martyn [18/2/X32 Allowance for Doubtful Debts E [ Accounts Receivable-N. Fyfe E E E E E 17674 [176746 | H b) On 30th June 20x3 Aubergine Ltd reassessed its Allowance for Doubtful Debts account to allow for bad debts that may become uncollectable in the future using the aged receivables method. You are provided with the following aged debtors listing as at the 30th June 20x3.- Current Debtor 0-30 days 31-60 days 61-90 days 91+ days $2 se 2,786 1,348 3,7604 T. Walker P. Dangerfield R. Sloane A. Gaffe 989 1,3474 4,3224 3,6564 2,3104 1,1124 1,9824 1,8004 1,3234 S. Pendlebury L. Neale N. Natainuie R. Gray L. Franklin 5,4384 2,329 3,185 1,8774 4,5344 3,2444 2,878 Aubergine Ltd have determined that the following rates of uncollectability are to be applied in determining their allowance for bad debts. 90+ days Current To 30 days 31-60 days 61-90 days 1.0% 2.5% 4.0% 18.0% 45.0% Required 7 marks Prepare the general journal entry to record the Allowance for Doubtful Debts for Aubergine Ltd as at 30th June 20x3 using the aged receivables method and the above information. Note - you need to take account of the debts written off in part a) above when calculating the journal entry. DR CR Date E E E- E H EF TTTTTT t' He Et 1 E- c) On the 31st October 20X3 Aubergine Ltd decided to write off all the amounts that were owing by A. Gaff as at 30th June 20x3 as a bad debt. Required 2 marks Prepare the journal entry for the write off all the amounts owing by A. Gaff as a bad debt as at 31st October 20X3. DR CR H Date E- E- E- E E- E- E- E IE E- E H H H d) There are no further debt write offs for the year ended 30th June 20x4 for Aubergine Ltd. At the 30th June 20x4 Aubergine Ltd calculated the balance of the Allowance for Doubtful Debts account using the aged receivables method. This amount was $2,978.- Required 2 marks Prepare the journal entry to record the adjustment to the Allowance for Doubtful Debts account required at the 30 June 20x4.- DR CR Date E H. E Fe E E- E- E- E- E E- H H. e) During the financial year ending 30th June 20x5 there were no bad debt write offs. As a result Aubergine Ltd reviewed all their percentages which are applied in the aged receivables method. Consequently the balance of the Allowance for Doubtful Debts at the 30th June 2005 was calculated to be $2,270.- Required 3 marks Prepare the journal entry to record the adjustment to the Allowance for Doubtful Debts account required at the 30 June 20X5.4 DR CR T. Date E- E E H E E E- E E E- Ee E